BDC snows the Senate part 3

The Senate of Canada’s Standing Committee on Banking, Trade and Commerce (“BTC”) report on the Business Development Bank of Canada’s 10 Year Statutory Review even touched on the BDC Subordinated debt group:

“This type of lending is typically offered to those seeking financing for transactions valued at less than $3 million, businesses outside urban centres for which subordinate financing is limited….” pg. 7

Well, this is something I’ve written about in the past (see prior post “‘Bruce’ the mindless eating machine” May 31-08). Between 1999 and 2002, the number of BDC subdebt deals that were equal to or greater than $2 million was modest. As a percentage of all deals over $500k, they ranged from 0% to 12.5%.

In 2003, that number jumped to 20%, and stayed around that range for a three year period. Then the pedal hit the metal with the arrival of new CEO Jean-Rene Halde, and the percentage of meaty BDC subdebt deals jumped to 34.4% in 2006, slipping modestly to 32% last year.

Some transactions were in the $14-15 million range, which is nothing like the “less than $3 million” figure the Senate was told. Dozens exceeded $5 million. I know. We bear the scars of lost opportunities.

As for the non-urban focus, that’s a wonderful canard. We’ve lost deals to the Subdebt group’s predatory competitive practices in the rural backwaters of Calgary, Toronto and Ottawa, for example. And Timmins, and….

MRM